The Group Managing Director of First Bank Plc, Mr Stephen Onasanya has called on the Central Bank of Nigeria (CBN) to unlock lending to the Small and Medium Enterprises (SMEs) by increasing the tolerance level for non-performing to the sector from the current 5 per cent
Mr Onasanya made the call in Lagos yesterday at the CEO Roundtable on Sustainability where he gave a general remark to business leaders and representatives from education, trade, industry and agencies of government.
The outgoing First Bank GMD said Nigerian banks should be encouraged to play their developmental role in the economy.
But for banks to play that role very well, he advised, they must redefine their tolerance limit for credit risk assessment and non-performing loans to the SME segment of the market
The current non-performing loan (NPL) ratio for the MSME sector is put at five per cent by the Central Bank of Nigeria.
Onasanya said that unless the regulators encourage this, no bank will do it because banks are measured and gauged by the tolerance level that has been set by the CBN
He regretted that “there were some banks which, in their entrepreneurial spirit, extended beyond the limit but, unfortunately, they are not here today. They extended beyond the normal spectrum.”
He emphasised that banks should be encouraged to dedicate a certain percentage of its portfolio to the small and medium scale enterprises, in addition to relaxing the risk acceptance criteria in such a manner that do not subject SMEs to the same test as established institutions
“This specifically means that we (the banks) must be willing to bear some additional losses on our revenue because we want to develop the MSME sector,” he stressed
The CEO of MTN Nigeria, Mr Michael Ikpoki pointed out, at the event, the need to create a structured coalition around the SMEs.
“We all must use our ecosystem support for the SMEs because what we are dealing with is not a corporate objective but a national one,” he said